Top economics writers are sending some scary signals this week. Just as June unemployment numbers are due, Paul Krugman's declaring that we could be headed for a third Depression, and David Leonhardt, also writing in the New York Times quotes source after source saying “The world’s rich countries are now conducting a dangerous experiment.”
The dangerous experiment, both writers agree, is the idea of belt-tightening when more spending is needed, of letting stimulus lapse when most people are still struggling for jobs. During the Great Depression, when business started to improve, Roosevelt vowed to balance the budget—and sent the country back into decline. The only thing that yanked the economy into a different direction was build up to war and war.
We've got better ideas than that, now, right? Maybe not. A year ago, former Treasury Secretary Larry Summers told the BBC at Davos that 90s-style growth simply isn't coming back. Yet, shunning a government jobs-creation scheme, the president's still hoping against hope for private industry created jobs. No reason to believe the private sector will do anything different than what they've done these last two years. Productivity's up with slashed wages and workers. The private sector's doing fine. And now the deficit hawks are circling.
So what's the plan, Uncle Sam? In many places, the military's the only job offer out there. Democrats in Congress just cut $13B from schools to fund $33B on Afghan escalation. Maybe that's the plan.
Mr. Leonhardt makes only one small oblique reference to Germany’s persistent fear
of stimulus, because of the “role of inflation in bringing the NAZIs
to power”. Is this a very weak reference to voters’ susceptibility to
demagogues and other right-wing politicians running on negative aims
such as anti-immigration, anti-gay, anti-ethnic minority during
protracted troughs after economic bubble bursts?
He doesn’t mention at all the facts of concentrated economic power that
paid to get Hitler elected, so that they could be the first to rebuild
their economy with war and purloining other countries’ natural
resources.
Today the US has the highest concentration of wealth since the era of
which we speak, which translates into unwieldy corporate control over
every one of our major industry sectors.
Our Supreme Court allows this wealth concentration to wield unequal
power over the legislatures here, just like the concentrated power in
dynastic aristocratic and industrial families controlled a poorly
conceived parliament and weak constitution in Germany then, or Russia
a few years before, with practically unbridled prerogative to solve
economic troubles by instigating profitable wars on resource rich
foreign countries.
Our Supreme Court allows tight control of the mass media in this
country, and its unbridled use by owners for political goals, such as
diversionary negative aims to incite an increasingly anxious and
“without representation” population, rather than any credible investigation
and exposition of the real causes of troubles here, just like back then.
Media companies are used to promote right-wing political candidates
and their projects all across this country. While no visible trace of
fingerprints can be attributed to the senior executives or controlling
shareholders of these companies, they do make the hiring decisions in
all those games through their carefully guarded chain of command.
Significant numbers of our academic economists are paid consultants to
the Federal Reserve System or otherwise receive income from private
“donors” who have very narrow range of financial goals and political
interests, very similar to the academics who rolled-over in Germany
starting in 1933 and lined up to produce ideology to support the
regime.
While the Neo-Liberal or Chicago School economists can criticize
“Obamanomics” today, they never criticize this anti-competitive nature
of our industries which violates essential market principles of broad
participation and competition. Instead we have “free”-markets where
there is weak competition at best, blocked by oligarchy or plutocracy
which naturally occurs in every unmitigated marketplace, as is ours
with next to no anti-trust prosecutions. That block will prolong the
trough and encourage the drive toward demagoguery politics and
right-ward slide being engineered by the media owners and other
wealthy backers who alone benefit from this kind of thing. That block
will prevent any dynamic market re-start.
These critics leave out this important detail about the difference
between today which they oversimplify in comparison to our situation
when Reagan took office. That was before the junk bond fueled M&A
market consolidated US business in every productive sector starting in
the 1980s and continuing unabated. That was also before China, India,
and Brazil represented credible attractive markets for US investment
capital which otherwise would have found a home right here in the US.
And also when there was not even one active war, not two at least,
sucking productive assets out of the re-start, enriching nobody but
the same types who put Hitler in power in Germany for the same
reasons.
These are all the dangers the Germans correctly fear which he puts
down to the tidy term: “inflation”. Once again over simplified!
By Bb on June 30th, 2010 at 8:41 pm
I would like to see this video, but it doesn’t work. I hit PLAY and nothing happens…
By Peter on June 30th, 2010 at 11:18 pm
Our host seems to have eaten the first video! I’ve fixed the problem. Sorry!
By admin on July 1st, 2010 at 10:12 am
[...] GRITtv | The F Word: Dangerous Experiment for Deficit Hawks [...]
By Links for July 6, 2010: Kagan on Corporate Speech, an Easter Egg in the Health Care Bill, Knocking “Deficit Hawks”, others…. « A Fine House on July 6th, 2010 at 10:48 am